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Article
Publication date: 1 August 1993

Shahrukh R. Khan

Identifies an error in the measurement of private rates of returnto aggregate levels of education. When education is viewed as acontinuous variable, the estimated rate of…

Abstract

Identifies an error in the measurement of private rates of return to aggregate levels of education. When education is viewed as a continuous variable, the estimated rate of return is to an incremental year of schooling. However, rates of return are often estimated for aggregate levels of education such as the secondary and university levels. When an aggregate level has sub‐levels, such as bachelors′ and masters′ for the university level, the conventional procedure underestimates the rate of return to the aggregate level due to the dominance of up‐front costs in the discounting procedure used to compute rates of return.

Details

International Journal of Manpower, vol. 14 no. 8
Type: Research Article
ISSN: 0143-7720

Keywords

Article
Publication date: 7 April 2022

Ardiana Gashi and Nicholas J. Adnett

This paper aims to investigate whether the conventional approach to estimating the private and social rates of return to education generates reliable findings when used in…

Abstract

Purpose

This paper aims to investigate whether the conventional approach to estimating the private and social rates of return to education generates reliable findings when used in economies with chronically depressed labour markets.

Design/methodology/approach

Conventional techniques (the Mincer earnings function and the discounting method) are used to provide initial estimates of the private and social returns to education in Kosovo. However, this study argues that in countries with chronically depressed labour markets, such as in Kosovo, the conventional approach is likely to significantly underestimate the private and social returns from achieving a higher level of educational attainment. This study extends the estimation approach to take into account the greater probability of more highly educated Kosovars being: employed, employed in the formal and public sectors and having longer job tenure.

Findings

The extended approach to estimating rates of return to schooling generates higher private and social rates of return to education than the conventional approach. Moreover, in contrast to the findings of the conventional approach, the revised approach suggests that private and social rates of return are highest from completion of upper secondary and tertiary education.

Research limitations/implications

The results indicate that if governments in economies with chronically depressed labour markets decide upon their educational priorities based on unadjusted rates of return, then resources may be misallocated.

Originality/value

The analysis presented in this paper suggests that conventional approaches to estimating private and social rates of return to education are not suitable for use in economies with chronically depressed labour markets. In addition, the paper provides the first comprehensive analysis of the rates of return to education in Kosovo. These results are used to provide a critique of the Kosovo Government’s recent educational priorities.

Details

International Journal of Development Issues, vol. ahead-of-print no. ahead-of-print
Type: Research Article
ISSN: 1446-8956

Keywords

Abstract

Details

Fostering Productivity: Patterns, Determinants and Policy Implications
Type: Book
ISBN: 978-1-84950-840-7

Article
Publication date: 27 October 2021

Claudio E. Montenegro and Harry Anthony Patrinos

Young people experience lower employment, income and participation rates, as well as higher unemployment, compared to adults. Theory predicts that people respond to labor…

Abstract

Purpose

Young people experience lower employment, income and participation rates, as well as higher unemployment, compared to adults. Theory predicts that people respond to labor market information. For more than 50 years, researchers have reported on the patterns of estimated returns to schooling across economies, but the estimates are usually based on compilations of studies that may not be strictly comparable. The authors create a dataset of comparable estimates of the returns to education.

Design/methodology/approach

The data set on private returns to education includes estimates for 142 economies from 1970 to 2014 using 853 harmonized household surveys. This effort holds the constant definition of the dependent variable, the set of controls, sample definition and the estimation method for all surveys.

Findings

The authors estimate an average private rate of return to schooling of 10%. This provides a reasonable estimate of the returns to education and should be useful for a variety of empirical work, including critical information for youth.

Originality/value

This is the first attempt to bring together surveys from so many countries to create a global data set on the returns to education.

Details

International Journal of Manpower, vol. ahead-of-print no. ahead-of-print
Type: Research Article
ISSN: 0143-7720

Keywords

Article
Publication date: 17 March 2021

Richard Kofi Asravor

The increasing rate at which individuals, especially, females in Ghana are seeking higher education calls for an estimation of the returns to schooling and education in Ghana.

Abstract

Purpose

The increasing rate at which individuals, especially, females in Ghana are seeking higher education calls for an estimation of the returns to schooling and education in Ghana.

Design/methodology/approach

The study employs the Mincer equation to a representative cross-sectional micro-data from Ghana using OLS and instrumental variable (IV) methodologies. The paper uses spouse's education as instruments in the IV estimation.

Findings

Return to schooling was found to be higher for females than males, likewise, membership of an old student associations and location of the household. Returns to education increases as the level of education rises whilst the rate of returns initially increases but fall as labour market experience rises. The study also found that the rates of return to education were higher for Christian, followed by Muslim and believers of other lesser-known religion in Ghana.

Research limitations/implications

Return to schooling was found to be higher for females than males. Likewise, individuals who are members of an old student association and are in urban areas were found to have a higher return to schooling than individuals who are not members of an old student association and are in rural areas. Returns to education increases as the level of education rises whilst the rate of returns initially increases but fall as labour market experience rises. The study also found that the rates of return to education were higher for Christian, followed by Muslim and believers of other lesser-known religion in Ghana.

Practical implications

Wage determination process is different for males and females, across religion and residency. The higher returns to schooling for females imply education is a good investment for women and girls and should be a development priority.

Social implications

The higher returns to schooling for females imply an investment in girl's education should be a development priority.

Originality/value

The paper extends the existing literature by focussing on the role of religion, old student's association (alma mater) and gender on the differential earning returns to schooling.

Details

International Journal of Social Economics, vol. 48 no. 6
Type: Research Article
ISSN: 0306-8293

Keywords

Article
Publication date: 27 May 2014

Concetta Mendolicchio and Thomas Rhein

The purpose of this paper is to study the gender specific private returns on education (RE) in Europe in a comparative perspective. The authors extend the model of de la…

Abstract

Purpose

The purpose of this paper is to study the gender specific private returns on education (RE) in Europe in a comparative perspective. The authors extend the model of de la Fuente (2003) by estimating the parameters by gender and introducing maternity leaves and benefits. The paper analyses the impact of the public policy variables evaluating the elasticities with respect to unemployment benefits, marginal and average tax rates, maternity leave and childcare benefits.

Design/methodology/approach

The authors estimate the Mincerian coefficients, with the Heckman’ selection model, for 12 West European countries using the EU-SILC data. The authors then use them as input to calibrate the decision model.

Findings

The RE of females tend to be higher than those of males in all the Europeans countries but Germany, the Netherlands and Sweden. The gender gap can be explained mainly by the wage premia and labour income taxes which more than compensate the negative effects on females’ returns triggered by higher unemployment rates and maternity-related benefits.

Practical implications

The tax system has the most pronounced effect on RE. An increase in the marginal tax rates has a negative impact. An increase in the average tax rates can have a negative or positive impact, depending on the progressivity of the tax system. An increase in unemployment benefits and maternity or child-care benefits has a negative but fairly small impact.

Social implications

The analysis considers just one dimension of maternity related policies: the effect on RE and differences across gender. These policies may have aims which are beyond the scope of this paper, for instance to increase fertility. From this viewpoint, the small values of the elasticities presented are reassuring in that they suggest that they can be implemented at a fairly small cost in terms of investment in human capital.

Originality/value

The authors compute the RE using a model which allows us to take into account and assess the significance of relevant variables: wage premium, income tax, some public transfers and benefits, costs of the investments. Moreover, the authors estimate the wage premia using relatively recent EU-SILC data. Finally, the paper compares 12 EU countries spanning quite different labour market conditions and institutions.

Details

International Journal of Manpower, vol. 35 no. 3
Type: Research Article
ISSN: 0143-7720

Keywords

Article
Publication date: 27 July 2018

Weidong Wang, Yongqing Dong, Renfu Luo, Yunli Bai and Linxiu Zhang

The purpose of this paper is to examine the role of education in the labor market and to understand how returns to education change over time in rural China.

Abstract

Purpose

The purpose of this paper is to examine the role of education in the labor market and to understand how returns to education change over time in rural China.

Design/methodology/approach

Using nationally representative survey data from 2004 to 2015, this study provides insights on wage determination in the labor market and examines how the returns to education in rural China differ with time and educational endowment. This study applies ordinary least squares estimation and the Heckman selection model to estimate the returns to education.

Findings

The returns to education decreased during the observed years from more than 6 percent in 2004 to only about 3 percent in 2011, rising to nearly 4 percent in 2015. The overall trend is robust and observed within groups defined by education. Additionally, the returns to education vary greatly with educational endowment. Tertiary education has always maintained a high rate of returns at nearly 10 percent, while returns to senior high school education and below have gradually diminished.

Originality/value

The authors believe that the results will not only enrich studies on the returns to education in rural China, but also provide a basis for diagnosing the changes of rural labor market in the early twenty-first century.

Details

China Agricultural Economic Review, vol. 11 no. 1
Type: Research Article
ISSN: 1756-137X

Keywords

Article
Publication date: 1 April 2004

Omar Arias, Gustavo Yamada and Luis Tejerina

This study investigates the role of race, family background and education in earnings inequality between whites and the African descendent population in Brazil. It uses…

3835

Abstract

This study investigates the role of race, family background and education in earnings inequality between whites and the African descendent population in Brazil. It uses quantile Mincer earnings regressions to go beyond the usual decomposition of average earnings gaps. Differences in human capital, including parental education and education quality, and in its returns, account for most but not all of the racial earnings gaps. There appears to be greater pay discrimination at the higher salary jobs for any skill level. Returns to education vary with the gradient of skin color. While returns are similar for white and mixed race workers at the top of the adjusted wage scale, mixed race workers at the bottom are rewarded similar to blacks. Thus, while equalizing access to quality education is key to reduce racial earnings inequality in Brazil, specific policies are also needed to facilitate equal access of non‐whites to good quality jobs.

Details

International Journal of Manpower, vol. 25 no. 3/4
Type: Research Article
ISSN: 0143-7720

Keywords

Article
Publication date: 26 June 2009

Indunil De Silva

The main purpose of this paper is to investigate the sheepskin effects in the returns to education in the Sri Lankan labor market by ethnicity.

Abstract

Purpose

The main purpose of this paper is to investigate the sheepskin effects in the returns to education in the Sri Lankan labor market by ethnicity.

Design/methodology/approach

The study is based on the latest Sri Lankan Consumer Finance and Socio‐economic Survey. The study employs the quantile regression method for each conditional quantile wage group, rather than the mean regression analysis used in most labor market analysis. The quantile regression technique fits hyperplanes through out the conditional wage and is ideal for characterizing the entire wage distribution. The standard Mincerian wage equation was estimated for the full sample of male workers and separately for the two main ethnic groups in Sri Lanka.

Findings

The empirical findings are broadly encouraging. Quantile regression results suggest that average returns to education for both ethnic groups differs significantly from the returns at the two extreme ends of the wage distribution. In general, the returns to education are positive for both groups, but the returns are higher for Sinhalese workers than for Tamil. An increasing trend in returns to education is evident for both ethnic groups when moving up wage distribution. Sinhalese workers experience higher returns to education than for Tamil especially at the bottom of the wage distribution, but the difference becomes less at the upper part of the distribution. Estimated results with spline in years of education suggest that returns to secondary education are higher for Sinhalese workers, but the returns to tertiary education are greater for Tamil workers at the upper part of the wage distribution. Findings indicate that returns to experience are also higher for Sinhalese workers than for Tamil workers.

Originality/value

This is the first study that examines sheepskin effects in the returns to education by ethnicity in Sri Lanka in a Mincerian framework, employing quantile regression models.

Details

International Journal of Development Issues, vol. 8 no. 1
Type: Research Article
ISSN: 1446-8956

Keywords

Article
Publication date: 1 February 2003

Andrew Clark

Russia has undergone tumultuous changes during the transition process. This has been nowhere more evident than within the labour market. The transition has now progressed…

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Abstract

Russia has undergone tumultuous changes during the transition process. This has been nowhere more evident than within the labour market. The transition has now progressed to such an extent that it is possible to examine whether the issues of a re‐capitalisation and restructuring of human capital have been addressed. This paper uses the Russian Longitudinal Monitoring Survey to assess rates of return to human capital investments for the years 1994‐1998. It utilises standard earnings functions to assess the returns to education as well as to specific levels of post‐compulsory education and training. This article places specific emphasis on firm level training and the role of the firm, for the purpose of this special issue. Results suggest, in the case of Russia, that significant and positive returns to education and training exist comparable in magnitude to those in other transition countries.

Details

International Journal of Manpower, vol. 24 no. 1
Type: Research Article
ISSN: 0143-7720

Keywords

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